“We hear a lot of talk about this or that human right, such as a right to health care, food or housing. That’s a perverse usage of the term “right.” A right, such as a right to free speech, imposes no obligation on another, except that of non-interference. The so-called right to health care, food or housing, whether a person can afford it or not, is something entirely different; it does impose an obligation on another. If one person has a right to something he didn’t produce, simultaneously and of necessity it means that some other person does not have the right to something he did produce.
That’s because, since there’s no Santa Claus or Tooth Fairy, in order for government to give one American a dollar, it must, through intimidation, threats and coercion, confiscate that dollar from some other American. I’d like to hear the moral argument for taking what belongs to one person to give to another person.
There are people in need of help. Charity is one of the nobler human motivations. The act of reaching into one’s own pockets to help a fellow man in need is praiseworthy and laudable. Reaching into someone else’s pocket is despicable and worthy of condemnation.”
~George Mason economist Walter Williams, in his column “Compassion Versus Reality“
From today’s WSJ, “Our Soviet Health System” by Dr. Robert Swerlick, Emory University School of Medicine:
Those who control public policy treat pricing as something trivial — the concern of bourgeois shop keepers peddling trinkets. Yet the dilemma of administrative pricing causes problems for the allocation of resources today that would only be amplified if the U.S. moves toward even more government intervention in health care than already exists.
Where do prices come from, how do we know when they are right? If the prices set are mistaken — result in a mismatch of supply and demand — how are they to be corrected if pricing decisions are made in a political (bureaucratic) arena, and by the market (supply and demand)? These questions cannot be wished away.
One important lesson of the 20th century is that, while markets are far from perfect, more choices are available when people are able to use free markets to interact with each other. Markets may not get the prices exactly correct all the time, but they are capable of self-correction, a capacity that has yet to be demonstrated by administrative pricing.
It tells you something when the supply of and demand for specialist veterinary care is so easily matched when the prices of these services are established on the market — while shortages and oversupplies are common for human medical care when the prices of these services are set by administrators in the public sector. Will health-care reformers — and American citizens — get the message?
In response to Columbia President Lee Bolinger’s (formerly president of the University of Michigan) article in the Chronicle for Higher Education (subscription required) “Why Diversity Matters,” Dinesh D’Souza writes “Why Diversity Doesn’t Matter:”
Consider two scenarios for UC-Berkeley or UCLA. In the first, the campus is 45% Asian, 48% white, 4% Hispanic and 3% black. In the second, the campus is 30% Asian, 55% white, 7% hispanic, and 8% black. Does the second scenario strike you as markedly more diverse than the first?
Actually it isn’t. The fraction of minorities is roughly the same. The difference is that the first scenario is produced by merit. It represents merit-based diversity. It is a pretty good picture of what Berkeley and UCLA look like now. The second scenario is produced by racial preferences. It represents socially-engineered diversity. It is how Berkeley and UCLA used to look in the era of racial preferences.
The advantage of natural diversity is that it achieves its goal without sacrificing merit. The disadvantage of socially-engineered diversity is twofold: First, it is unfair to qualified students who are denied admission. If you want to raise the proportion of under-represented groups, you have to lower the proportion of over-represented groups. But who are these over-represented groups? Basically they are Jews and Asian Americans. And they are over-represented not because they are discriminating against anybody but because they are out-performing everybody. So why should they suffer?
The second disadvantage of ethnic and racial preferences is that they often hurt the students they seek to help. How? By putting them into competition with students against whom they are mismatched. A Hispanic student who can do the work and compete effectively at San Francisco State University is admitted to Berkeley, where he is completely overwhelmed by the work and ends up at the bottom of the class, or worse, dropping out. California’s public universities had scandalous black and Hispanic dropout rates in the era of affirmative action.
The bottom line is that Bollinger is wrong. Yes, diversity is good for higher education, but the issue raised by affirmative action is not one of “diversity” versus “no diversity.” It is a matter of the natural diversity produced by talent and hard work, versus Bollinger’s type of socially engineered diversity. The National Football League doesn’t look like America, the U.S. Congress doesn’t look like America, Hollywood doesn’t look like America, so why is it so important that UCLA or Columbia look like America? In this country what matters is not how you look but what you can do.
From the 25 year period from 1982 through January of 2007, the CPI for food increased at an annual rate of 2.89%, and the CPI for unleaded gasoline increased at almost exactly the same rate of 2.88% (see graph above, click to enlarge). However, the variability of gas prices over this period was almost 13 times higher than food prices, measured by the standard deviations of gasoline inflation and food inflation, 51% vs. 4% respectively. (And to be fair, if you add in the last several months of gasoline price increases, the 25-year average inflation rate for gas is slightly higher than for food.)
This difference in inflation varability probably explains why you’ll find twice as many Google search hits for the term “rising gas prices” comared to “rising food prices.” Even though food prices rise historically at almost the exact same rate as gasoline prices, it’s the variability of gasoline prices that makes the average person unsettled and upset about gasoline prices and relatively unconcerned about rising food prices.
Bottom Line: Even though gas and oil prices are volatile and change daily, that’s not a sign of any market failure, it’s actually the opposite: daily proof that the magic of the market is working perfectly and efficiently to continually “clear the market” and prevent shortages and surpluses.
And it’s the variability of gas prices that probably explains why there is legislation for “price gouging,” “unconscionably excessive prices,” and “winfall profits” for gasoline and oil, but NOT for food.
Think about how a majority of the general public would answers these 9 questions, let me predict their answers as follows:
1. Is global warming a problem and do automoblies contribute significantly to it? YES
2. Is increased energy efficiency desirable? YES
3. Are alternative fuels like wind and solar desirable? YES
4. Should we encourage hybrid cars? YES
5. Should we try to reduce energy consumption as much as possible? YES
6. Should we try to promote increased energy conservation? YES
7. Are higher gas prices, like $5 per gallon, a good thing? NO
8. Would you like to see lower gas prices this year, like $2 per gallon? YES
9. Should we legislate against “price gouging” by oil companies? YES
Bottom Line: The general public’s predicted answers to Questions 7 – 9 are in direct opposition to their answers to Questions 1 – 6. That is, based on the predicted answers to Group A questions, people should advocate HIGHER prices for gas and NOT LOWER prices!
Higher gas prices, e.g. $5 per gallon, would lead to MORE energy conservation, LESS pollution, and INCREASED use of alternative fuels, whereas lower gas prices, e.g. $2 per gallon, would lead to LESS energy conservation, MORE pollution, and a DECREASED use of alternative fuels.
The chart above (click to enlarge) is from Gongol.com’s monthly Traffic Rankings for Major Business and Economics Websites, see the top 10 blogs above and Carpe Diem (#43) from June 1.